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Tuesday, November 11, 2014

Eclipse Resources Reports 3rd Quarter Results

From an Eclipse Resources press release:
Eclipse Resources’ production volumes for the third quarter 2014 averaged 85.8 MMcfe per day, which exceeded the high-end of the Company’s previously issued guidance for the quarter and represents an approximate 104% increase from Eclipse Resources’ second quarter 2014 production. The production mix during the third quarter 2014 was 78% natural gas, 9% natural gas liquids and 13% oil. The percentage of the Company’s production that was comprised of liquids (natural gas liquids and oil) also exceeded the Company’s guidance for the quarter. Production for the quarter was approximately 65% operated. 
Eclipse Resources’ average realized natural gas price, excluding the effects of cash settled derivatives, for the third quarter 2014 was $2.78 per Mcf, a $1.17 negative differential to the NYMEX average price for the period. For the third quarter 2014, Eclipse Resources realized a cash settled natural gas derivative gain of $0.6 million, or $0.09 per Mcf, equating to an average realized natural gas price of $2.87. Eclipse Resources’ average realized natural gas liquids (NGL) price for the third quarter 2014 was $44.09 per barrel, or approximately 45% of the NYMEX WTI oil price average for the period. Eclipse Resources and the operators of its non-operated properties are currently rejecting the majority of ethane production at the gas processing plant and selling it into the natural gas stream. Eclipse Resources’ average realized oil price for the quarter was $80.06 per barrel, a $17.19 per barrel discount to the NYMEX WTI price. Eclipse Resources did not have any cash settled natural gas liquids or oil derivative instruments during the period. The average all-in natural gas equivalent price, including cash settled derivatives, was $4.60 per Mcfe for the third quarter 2014. 
During the third quarter 2014, Eclipse Resources commenced drilling 16 gross (12.6 net) operated Utica Shale wells, completed 17 gross (12.6 net) Utica Shale wells and placed 13 gross (8.8 net) Utica Shale wells into sales. In the Company’s Dry Gas type curve area, Eclipse Resources placed its Shroyer Unit into sales, consisting of 2 gross (2.0 net) Utica Shale wells, with average completed lateral lengths of 7,422 feet at combined peak 30-day average sales rates to date of 47.0 MMcf per day. The Shroyer wells have continued to demonstrate sustained high pressures since being placed into production in August 2014 and are currently producing at a combined rate of approximately 45.4 MMcf per day. The Company believes the Shroyer wells are supportive of the Company’s Dry Gas type curve assumptions. 
In the Company’s Condensate type curve area, Eclipse Resources placed 10 gross (5.8 net) Utica Shale wells on its Mizer and Mizer Farms pads into sales, with average completed lateral lengths of 6,049 feet at a combined peak 30-day average sales rate to date of 44.3 MMcfe per day comprised of 40% natural gas, 24% natural gas liquids and 36% oil. Although the wells are currently constrained due to the capacity of the condensate stabilization facility supporting the pads, Eclipse Resources believes that the wells will produce in line with its Condensate type curve area assumptions. Eclipse Resources is currently in the process of increasing the capacity of the condensate stabilization facility, which will enable the Company to process the higher than expected condensate yields from these wells. 
Additionally, in the Company’s Rich Gas type curve area, Eclipse Resources placed the Duane Weisend 4H well into sales, with a completed lateral length of 8,853 feet, at a peak 30-day average sales rate to date of 13.8 MMcfe per day comprised of 77% natural gas and 23% natural gas liquids. Although the BTU content of the gas is lower than anticipated at 1,170 BTU, the well is expected to produce at a gas rate in line with the Company’s type curve for the area. 
All of Eclipse Resources operated wells are being produced using the Company’s restricted choke methodology in order to manage the reservoir pressure drawdown over time in an attempt to maximize the ultimate recovery of each well. 
Since entering the Utica Shale through September 30, 2014, Eclipse Resources had completed and turned in line 17 gross operated Utica Shale wells as shown in the table below:
        

        
24-Hr

CompletedTurn to
Peak Sales
30-Day Avg
Lateral

SalesRate
Sales Rate
Well Name
Length
Type Curve Area
Month(Mcfe/d)(Mcfe/d)% Gas% NGL% Oil
Duane Weisend 4H8,853Rich GasSep-1415,52513,77077%23%0%
Tippens 6HS5,850Dry GasDec-1323,58518,601100%0%0%
Herrick A 3H5,761Dry GasJun-1417,06813,511100%0%0%
Herrick B 5H6,380Dry GasJun-1414,61610,828100%0%0%
Herrick C 8H6,232Dry GasJun-1416,59014,503100%0%0%
Shroyer 2H8,235Dry GasAug-1430,14424,848100%0%0%
Shroyer 4H6,608Dry GasAug-1423,66322,131100%0%0%
Mizer 2H5,986CondensateAug-147,9105,54039%24%37%
Mizer 4H5,903CondensateAug-147,7985,85640%24%36%
Mizer 6H5,811CondensateAug-146,1734,47340%24%36%
Mizer 8H5,970CondensateAug-147,5595,97841%25%34%
Mizer 10H5,943CondensateAug-146,9995,52241%25%34%
Mizer Farms 1H6,421CondensateSep-146,8823,49140%25%35%
Mizer Farms 3H6,467CondensateSep-145,2992,34339%24%37%
Mizer Farms 5H6,343CondensateSep-146,7952,74738%24%38%
Mizer Farms 7H5,826CondensateSep-146,9043,55640%24%36%
Mizer Farms 9H5,823CondensateSep-147,7614,78138%23%39%
Average6,37712,4289,558
 
As of October 31, 2014, Eclipse Resources had 10 gross operated wells drilling, 18 gross operated wells drilled and awaiting completion or completing, and 14 gross operated wells completed and awaiting turn to sales. In addition, Eclipse Resources owns an interest in 57 gross non-operated producing Utica Shale wells, 11 gross non-operated wells drilling, 24 gross non-operated wells drilled and awaiting completion or completing, and 7 gross wells completed and awaiting turn to sales. A full summary of wells in progress and producing on October 31, 2014 is as follows:
    
Operated  Non-Operated
Average Working
  
Average Working
  
Status
Interest %
Well Count
Interest %
Well Count
Drilling97.1%10 gross (9.7 net)15.8%11 gross (1.7 net)
Awaiting Completion/ Completing82.3%18 gross (14.8 net)23.8%24 gross (5.7 net)
Awaiting Turn to Sales89.3%14 gross (12.5 net)10.1%7 gross (0.7 net)
Turned in Line75.3%17 gross (12.8 net)14.9%57 gross (8.5 net)
 
“Eclipse Resources has now drilled 51 operated wells to TD. Since spudding our first operated Utica well, we have reduced our drilling times from an average of 49 days per well for our first 10 wells, to an average of just 16 days per well for our last 30 wells. Additionally, since commencing our operated drilling and completion program, we have reduced the total D&C cost per foot of lateral from an average of approximately $2,400 per foot for our first 10 wells, to an average of approximately $1,640 per foot for our last 30 wells despite testing tighter stage completions than originally planned on these wells. We plan to continue to constantly work to optimize our drilling and completion methods and believe we can continue to reduce costs even further in the coming year,” said Mr. Hulburt. 
The Company is currently running three operated rigs in the Utica Shale play and plans to remain at three operated rigs for the near term while it monitors commodity prices and external market conditions. Due to both drilling efficiencies and acreage trades which increased the Company’s working interest in its operated wells, the Company expects that by year-end 2014, it will have spud 5 more net Utica wells and drilled approximately 34,000 more net lateral feet than originally planned, while utilizing fewer rigs than planned. 
Eclipse Resources has continued to increase its Utica Shale position and currently has approximately 101,100 net leasehold acres. In addition to its Utica Shale position, Eclipse Resources now has approximately 27,800 net leasehold acres prospective for the Marcellus Shale.
Read the entire release by clicking here. 

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